Tax dodgers who refuse to cough up could have bank accounts raided by HMRC after stronger powers handed to taxman

Tax dodgers who refuse to cough up could have their bank accounts raided by Her Majesty’s Revenue and Customs after stronger powers were handed to the taxman.

A raft of radical measures unveiled by George Osborne is expected to rake in an additional £4bn for HMRC.

This is part of a wider international effort to clamp down on individuals and companies that avoid tax, with Britain vowing to lead the way.

‘Public tolerance for those who do not pay their fair share evaporated long ago,’ declared the Chancellor.

Anyone owing more than £1,000 in tax or tax credits could see their bank account raided if they have been contacted several times are able to pay.

At least £5,000 would be left in an account, the Chancellor said, as he ramped up HMRC’s debt collection powers.

The move brings Britain into line with France and the US, which both have similar systems.

Companies that shift profits overseas by borrowing from divisions based in offshore tax havens will also be hammered by the changes.

Osborne said he ‘will block transfers of profits between companies within groups to avoid tax’.

The heavily criticised technique has been used by a host of overseas firms such as Thames Water, Npower and Starbucks to reduce UK tax bills.

But critics said the move could hit some large international companies not trying to avoid tax.

Eloise Walker, partner at Pinsent Masons law firm, said: ‘This draft legislation is drafted extremely broadly, meaning any profit transfer between two companies in a group that incurs any tax advantage at all will potentially be subject to UK tax, even if it has already been taxed overseas.’

The number of registered tax avoidance schemes has halved, while the amount collected by Government through compliance has doubled, Osborne said.

Now anyone found to be using personal tax avoidance schemes queried by HMRC must pay back the disputed sum immediately – and will only be reimbursed if the scheme is found to be legal. Previously tax avoiders only had to pay up if their case was struck down by the courts.

‘If people feel they’ve been wronged, they can of course go to court,’ said Osborne. ‘If they win, they get their money back with interest.’

Tax experts said the move would deter the wealthy from entering into such schemes.

Bill Dodwell, head of tax policy at Deloitte, said: ‘It will reduce the individuals doing these schemes because if you don’t get an immediate cash benefit there’s nowhere near so many people who will do a scheme.’

The new rules will apply retrospectively, meaning investors who participated in the schemes in the past – which could stretch back as far as 2004 – and are involved in a dispute with the authorities are likely to be asked to pay their bill come July.

The Chancellor also pledged to stop people – often foreign nationals – avoiding stamp duty by owning homes through a company. From midnight anyone buying a home worth £500,000 or more through a company must now pay 15 per cent stamp duty.